Not long ago, one of the brightest lights within General Electric Co. was NBC.
But for the last three TV seasons, the once-dominant network has finished fourth place in the prime-time ratings and watched its advertising revenue drop by nearly $1 billion.
This spring, NBC posted embarrassing multiyear lows in the ratings, prompting frustrated NBC Universal executives last week to sack the network's programming head, Kevin Reilly, just three months after extending his contract for three years.
Now, some investors are urging GE Chairman and Chief Executive Jeffrey Immelt to shed his news and entertainment empire, NBC Universal, to streamline the industrial conglomerate and boost its stalled stock price.
"GE stock has basically gone sideways for five years despite solid underlying execution," Citigroup analyst Jeffrey Sprague wrote in a recent report. The troubles at NBC Universal are partly to blame, Sprague said.
Nevertheless, Immelt seems resolved -- at least for now -- to hold onto NBC Universal. The entertainment division, which last year brought GE $16 billion in revenue, includes the NBC and Telemundo broadcast networks and a group of TV stations; Universal Studios theme parks and film studios; cable TV channels MSNBC, CNBC, USA Network, Bravo and Sci Fi; and Internet sites including iVillage.
"There are more reasons to hang in there and see the business improve and see how the next hand gets played as it pertains to changes in the industry like digitization and globalization," Immelt said in a wide-ranging interview recently.
"If I thought that content was going to be less valued in a digitized age, I would say, 'Boy, now might be the time to get out,' " Immelt said. "I don't feel that way."
The 51-year-old executive, who replaced GE's legendary chairman Jack Welch just four days before Sept. 11, 2001, conceded that NBC Universal was not a snug fit with the rest of his company, which produced $163 billion in revenue last year. GE manufactures appliances, jet engines, wind turbines, locomotives, healthcare products and more. It also owns a web of financing and consumer credit services.
"Whereas a business like aircraft engines fits 100%, I would say with NBC, it may only be 70%," he said.
It's the remaining 30% that can be vexing because of the hit-and-miss art of picking, making and scheduling television shows and movies that resonate with audiences. Managing the creative process is different from anything else GE does.
